As Motorola (NYSE: MOT) prepares to unveil its new lineup of phones based on the Google (NSDQ: GOOG) Android operating system, analysts are expecting the company to go after a lower-end niche that’s less crowded, rather than compete head-to-head against the likes of Apple (NSDQ: AAPL), Palm (NSDQ: PALM) and Research In Motion.
More importantly, Motorola will be trying to avoid its mistakes of the past — and won’t be trying to develop one hit device, like the Razr, but rather a solid portfolio, BusinessWeek reports. “I don’t expect these phones to be razzle-dazzle,” said Michael Mahoney, senior managing director at Falcon Point Capital. Motorola declined to comment.
The lower end smartphone market is a good niche. Margins could still remain relatively high because Android is a free operating system. Plus, the phones would be competing against devices, like the Samsung Instinct, which may be low-to-mid-range, but still drive people to use more data and surf the web, which carriers like.
Even if Motorola only achieve moderate sales, it would help. One new Android handset should sell for $300 before carrier subsidies, and another for $500, says Barclays Capital analyst Jeff Kvaal. At those levels, it would increase Motorola’s average handset selling price to $147 in the fourth quarter, up from $123 in the first quarter, Kvaal said. Next year, it could go higher. The goal of course is to increase the company’s overall market share. If it sees just mild success, it’s overall unit volume should increase by 20 percent to 70 million units shipped in 2010, Kvaal said, which will be a step in the right direction.

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